Legg Mason CEO to Dow Jones: ‘We Have to Earn the Fees We’ve Charged’

By Brendan Conway

Investors apparently remain bright on battered Legg Mason (LM): a 62% drop in fourth-quarter profit looks prettier when it’s served up with the smallest quarterly outflows from the company’s long-term funds since 2007.

Thus you see the stock rising 0.5% Tuesday even after a 23% gain year-to-date.

New Legg Mason (LM) CEO Joe Sullivan acknowledges to Dow Jones the pressures facing active money managers as passive options like ETFs are now “an accepted alternative and all but free.”…

Sullivan is confident investors looking for an edge on the market will still turn to active managers. “We have to earn the fees we’ve charged,” he notes. “If we don’t, we are going to lose those assets–and we should.”

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Chris Dieterich has covered the U.S. stock market for The Wall Street Journal and Dow Jones Newswires. He is a graduate of Regis University and the Missouri School of Journalism.